The ceo''s and heather''s treatment of the situation

Assignment Help Accounting Basics
Reference no: EM13881663

1.At the beginning of 2011, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods. The equipment was estimated to have a 10 year service life and no residual value. The straight line depreciation method was used to measure depreciation for 2011 and 2012.Late in 2013, it became apparent that sales of the new frozen food line were significantly below expectations. The company decided to continue production for two more years (2014 and 2015) and then discontinue the line. At that time, the equipment will be sold for minimal scrap values.The controller, Heather Meyer, was asked by Harvey Dent, the company's chief executive officer (CEO), to determine the appropriate treatment of the change in service life of the equipment. Heather determined that there has been an impairment of value requiring an immediate write down of the equipment of $12,900,000. The remaining book value would then be depreciated over the equipment's revised service life.The CEO does not like Heather's conclusion because of the effect it would have on 2013 income. "Looks like a simple revision in service life from 10 years to 5 years to me," Dent concluded. "Let's go with it that way, Heather."

Required:
1. What is the difference in before tax income between the CEO's and Heather's treatment of the situation?
2. Discuss Heather Meyer's ethical dilemma.

Reference no: EM13881663

Questions Cloud

What does the bumper sticker argue? : What does the bumper sticker argue?
The overhaul expenditures be capitalized : John Henderson, the company's controller, is worried about the treatment of the overhaul expenditures. Even though no individual expenditure exceeded the $750 materiality threshold, total expenditures were $70,000.
What are the main ideas presented by the author : This should be a concise summary of the content of the book including why the writing is significant/important. What are the main ideas presented by the author? Thoughtful statements which demonstrate that you have thought carefully understanding ab..
An alligator whose body length is 4 feet : An alligator with a body length of 7 feet has a tail length of 4.9 feet. What is the tail length of an alligator whose body length is 4 feet?
The ceo''s and heather''s treatment of the situation : 1.At the beginning of 2011, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods.
Donovan enterprises produces electric mixers : Donovan Enterprises produces electric mixers. Demands for the next four quarters are: 40000, 20000, 30000,and 70000. Each quarter's demand must be satisfied in the same quarter. Production cost is estimated to be $30 per mixer. Due to limited number ..
The factors responsible for differential survival of organis : Describe about the Factors responsible for differential survival of organisms and consequently their ability to reproduce and Make report of 900 words on Exploratory Activity on Bird Beak
Difference between behaving ethically and behaving legally : Are there any national or regional professional organizations that promote ethical behavior in chemical dependency counseling profession? Describe the difference between behaving ethically and behaving legally, and give an example
A real-world situation : 250-300 words Give an example of a real-world situation in which you would apply graphing and operating on conic sections. Describe a career where this would be important. Explain your answer.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Standard quantity per fruitcake

The loss rate is expected to be 1 ounce of pecans for every 5 ounces inspected. Under traditional standard costing, how many ounces of pecans should Holiday use as a standard quantity per fruitcake?

  Determine the most profitable number of beta-5 model

msa computer corporation manufactures two models of minicomputersthe alpha 4 and the beta 5. the firm employs 5

  What was the total amount of manufacturing costs assigned

materials costs of 800000 and conversion costs of 1020000 were charged to a processing department in the month of

  Prepare journal entries to record transaction for eduardo

Prepare journal entries to record these selected transactions for Eduardo Company

  Issues in costing

Describe three issues/problems that a company could encounter when trying to determine the actual cost of a good or service to be used in the cost of goods sold. For each of your issues, provide an example of a company or industry where these issu..

  Fact pattern for questions 11 and 12 multiple choice questio

Fact Pattern for Questions 11 and 12 multiple choice questions

  Weston corporation manufactures a product that is available

weston corporation manufactures a product that is available in both a deluxe and a regular model. the company has made

  Which can be friendly combinations or hostile takeovers

Many companies, as it is commonly known, achieve their growth through business combinations, which can be friendly combinations or hostile takeovers. Give your opinion on which type of combination is likely to occur in a company.

  Amount of office supplies expense

Fiber-Optics Company had an office supplies inventory of $800 at the end of its first year of operation. Office supplies costing $3,000 had been purchased during the year. What is the amount of office supplies expense for the year?

  Describe the evolution of auditing

Describe the evolution of Auditing in the US financial services system. When did it first gain prominence and why?

  Can someone point me where to find how to do this ive tried

can someone point me where to find how to do this? ive tried the book and web... suppose today is january 1 2012. using

  Case-venture company

Venture Company acquired patent rights on January 3, 2005, for$661,500. The patent has a useful life equal to its legal life of 15 years. On January 5, 2008, Venture successfully defended the patent in a lawsuit at a cost of $105,000.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd